Services still in decline

The services sector recovered in September after Covid restrictions in August, but it is still in decline.

The Performance of Services Index (PSI) found overall activity in Otago and Southland’s services sector in September was at 44.6 points, up from 34.2 in August.

That figure was much higher in July, however, coming in at 63.4 on the back of school holidays and lifted Covid-19 restrictions.

A PSI reading above 50 indicates services are generally expanding and below 50 that they are declining.

Stocks and inventories were about 50 but all other categories were in decline, including activity and sales levels, employment levels, orders and new business and supplier deliveries.

"The service industry is adjusting to the new norm of Covid-19 — which is considerably different from last year," Otago Southland Employers’ Association chief executive Virginia Nicholls said.

The services provided to the construction sector had been busy, whereas tourism was still recovering from the Auckland Covid-19 lockdown.

Tourism businesses were busier after Auckland moved to Alert Level 2 at the end of September and had hoped for a strong school holidays turnout.

"Our film industry across the region has genuine potential for growth, with a number of inquiries coming from international film productions," Mrs Nicholls said.

Retail was entering a crucial stage of the year with big sales coming up on Black Friday, Labour Weekend holidays as well as Christmas and Boxing Day.

International student education for tertiary providers and schools continued to be significantly impacted with the borders closed.

"There is a strong case for greater investment in effective border protection or using the private sector to allow more international students, business travellers and essential workers to come here and quarantine before being released into the community," Mrs Nicholls said.


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